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Councils given more flexibility to deliver affordable housing

council residential tower block Print publication

10/04/2014

Policy background

The Coalition Government has said more council housing has been built in the last three years than in the previous 15 years combined. The Government’s affordable housing programme is on track to deliver 170,000 homes by 2015 and a further 165,000 between 2015 and 2018.

Yet this still is not enough to alleviate the shortage of affordable housing, and on Monday 7 April Communities Secretary Eric Pickles and Chief Secretary to the Treasury Danny Alexander announced new powers for councils that, they claim, will enable 10,000 new affordable homes to be built.

More borrowing powers

The first is the ability for councils to bid for £300 million extra borrowing through an increase in their housing revenue accounts, something that had been announced in the Autumn Statement. There is now a prospectus, and councils have up to 16 June 2014 to submit either a firm bid or an Expression of Interest. All bids must be first approved by the appropriate Local Enterprise Partnership, as the extra borrowing will form part of the Local Growth Fund. Councils bidding for more borrowing will need to demonstrate maximum value for money by including funds from disposal of surplus assets, particularly high-value vacant stock, and by bringing forward their own land for new affordable housing.

More flexibility to dispose of land

To make it easier for councils to dispose of surplus land and vacant housing stock held in their housing revenue account, the Government also on Monday published the results of its August 2013 consultation on revising the general consents issued under section 25 of the Local Government Act 1988. Section 25 requires local authorities to obtain specific consent from the Secretary of State in order to dispose of vacant housing land and vacant dwellings at less than market value for the provision of privately-let accommodation. In addition to General Consent A, which allows councils to dispose of vacant housing land to registered providers at less than market value, there is a new General Consent AA allowing councils to dispose of that land to private developers. General Consent B is amended to remove the requirement that a property must be in need of renovation before disposal to a registered provider at less than market value. It also removes the cap on the number of properties that can be disposed of in this way.

Review of local authorities’ role in housing supply

Finally, an independent review was launched in January to consider how councils could play a bigger role in delivering new housing. It issued a call for evidence on 25 March, asking for ideas, evidence and case studies in order to consider new approaches to increase housebuilding, identify barriers and challenge ‘myths’ that stand in the way of housing developments. It aims to report by the end of 2014.

Comment

It remains to be seen how many councils will be willing, or indeed able, to bid for the increased HRA borrowing. Thirty authorities have no borrowing headroom at all, and a further 60 can only borrow up to £10 million each. 10,000 new homes from £300 million of extra borrowing equates to only £30,000 per unit so, as the prospectus points out, councils will need to show maximum value for money in their bids and they will need to have additional funding from other sources. Disposing surplus land and dilapidated buildings at an undervalue will surely only go part way to meeting the cost of new housing.